What Does the 2019 Federal Election Result Mean for Small Business?

In April 2019, the Coalition government announced it was increasing the instant asset write-off threshold to $30,000 per asset in a financial year. The program has been extended to 30 June 2020, but many think it’s likely the program will be extended beyond that point. Another change to the program was raising the eligibility limit to businesses from a maximum turnover of $10 million to a turnover of $50 million. This means that the program will be available to more medium and large businesses.  Learn more in How to Unlock the Full Benefit of the $30,000 Instant Asset Write-Off.

In late 2018, the Coalition brought forward a reduction in corporate tax rates cuts to 2021 – 2022 instead of 2026 – 2027. The rate will be reduced from 27.5% to 25% for incorporated businesses with revenue under $50 million per year. Many small businesses operate as sole traders so are not affected by the change in corporate tax rates.

In November 2018, the Coalition announced its support for establishing an Australian Business Securitisation Fund. The taxpayer-backed securitisation fund will invest in credit for small-to-medium enterprises. The fund will present potential benefits to SMEs. Small and medium businesses will have more choice when it comes to business lending in addition to easier and faster access to unsecured business finance. Reliance on business finance from big banks will be reduced, promoting growth in Australia’s dynamic fintech sector. Another potential benefit will be increased competition resulting from more industry funding, leading to lower interest rates on small business loans. See Australian Government’s $2 Billion Lending Boost – What Does It Mean for Small Business? to find out more.

For businesses working with Federal Government agencies, the Coalition has reaffirmed its commitment to pay invoices from SMEs within 20 days. As part of the initiative, the government would require larger businesses tendering for government contracts to commit to also paying SME suppliers within 20 days of invoice dates. In addition, Prime Minister Scott Morrison promised to require Australia’s largest 3,000 businesses to provide data on the time they take to pay small businesses. Late payments to SMEs are a serious problem in Australia. According to The State of Late Payment Report, Australia has the worst number of days late for payments, with an average of 26.4 days late after the due date.

After being winning the election, the Coalition will be able to implement the initiatives it announced earlier. These include:

• Establishing a Small Business Taxation Division within the Administrative Appeals Tribunal, to speed up the resolutions of SME tax disputes and provide a lower application fee.
• Allocating $249.8 million over five years for a trial of a new employment services model for 95,000 people seeking employment.
• Creating a dedicated sham contracting division within the Fair Work Ombudsman.
• Launching a National Labour Hire Registration Scheme.
• Boosting the funding of export development grants by $60 million.
• Continuing funding for the Fair Work Commission’s Workplace Advice Service clinics.
• Strengthening the VET system and providing small businesses with support to take on more apprentices in areas of skills shortages by funding the Delivering Skills for Today and Tomorrow package with $525 million.
• Rolling out e-invoicing as a way to reduce business transaction costs.

In April 2019, the Coalition Government announced it would support an Australian Business Growth Fund with $100 million of seed money. The fund would provide access to capital to SMEs showing the potential for high growth. In response, several banks announced that they would match the government’s funding. Similar funds in the United Kingdom and Canada have proved to be an effective way to promote SME growth.